Building an investment property portfolio from the ground up can be a long and daunting process, but it doesn’t have to be an unattainable dream. With the right strategy and thorough research you can confidently begin the process.

Define and develop your initial strategy

Developing your initial strategy should be treated like a blueprint for all your future investments. When it comes to owning investment properties, are you looking for rental yield or capital growth? How do you structure your investment?

Once you know what you want to achieve, research how you are going to go about it. Attend seminars, look at trends and opportunities and get some advice from trustworthy and reputable professionals.

Make sure you stick to your goals and have a written investment plan in place to ensure you know what it is you want to achieve and when you want to achieve it. It is a good idea to frequently review your goals and make sure you are on top of everything and still on plan. You should also consider what you will do if things go bad and have a strategy in place to mitigate your risks.

Select a property

Once you’ve decided on your investment strategy you can begin looking at what properties are available on the market and where you want to buy.

Choosing the right property is one of the most important factors to a successful investment portfolio. Ensure the property is easily sellable and has a low chance of rental vacancy.

Make sure you budget for all the costs that come with owning an investment property e.g. council rates, management fees and home insurance for landlords as well as periods in which the property may not be tenanted.
You also want to factor in the possibility of an interest rate rise. Calculate whether you would still be able to make the necessary repayments if interest rates were to increase.

The most important thing that you need to do is to ensure your first investment property is a good quality property, that is located in a high growth area which will help you get to property two and three a lot quicker. A great option is buying property off the plan as this gives you a longer settlement time for your property to grow in value without you having to pay a mortgage. Depending on the stage you bought and the development size, settlement can be in some cases two years away. By this time, if your property has benefited from high capital growth, you will have enough equity in your property to use as a deposit to purchase investment property number two.

Plan for the long term

Building a successful property portfolio requires your commitment over the long term. In order for you to see the biggest benefit from capital growth, you should hold on to your property for at least seven to 10 years. Although every situation is different, the basic rule is the longer you hold onto your property or properties, the more likely you’ll be able to ride out any downturns in the market cycle.

Take the Leap!

Making the leap and building the best property portfolio is a long process and a long terms strategy, but doing so will give you control over your future finances and set you on the right path to a relaxing, financially independent and well-deserved retirement.